EquipmentShare.com Inc

Hello, everyone. Thank you for joining us and welcome to Equipment Share Q1 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Rhett Butler, Vice President of Investor Relations. Rhett, please go ahead.

Good morning, and welcome to the Equipment Share First Quarter 2026 Financial Results Conference Call. Joining me today are Javik Schlacks, Founder and Chief Executive Officer, Willie Schlacks, Founder and President, Mark Wapita, Chief Data Officer and EVP of Finance, and Dave Marquardt, Chief Financial Officer and Chief Accounting Officer. Last night, we issued our earnings release and posted an earnings presentation to our investor relations website at ir.equipmentshare.com. We encourage you to review the presentation alongside today's remarks. Please be advised this call is being recorded. Comments made on today's call and responses to your questions may contain forward-looking statements within the meaning of applicable securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release, presentation, and SEC filings for a discussion of those risks. EquipmentShare has no obligation to update or revise forward-looking statements made on this call. We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings release. With that, I'll turn the call over to Javik.

Thank you, Rhett, and good morning, everyone. We delivered a strong first quarter and are raising our 2026 outlook across the board. The headline is not just the financial performance, but the durability of what is driving it. Strong demand in our core end markets, continued share gain with large customers, and the distinct value proposition of T3. I'll start with a macro backdrop in demand environment. Willie will cover the T3 platform advantage. Mark will walk through site performance and the OWN program. Dave will cover financial performance, and I will close with our updated 2026 outlook. A few headline numbers before we dive in. Rental segment revenue was $764 million, up 37% year over year. Adjusted core EBITDA was $399 million, up 39% year over year. We opened 22 new locations and ended the quarter with 407 operational locations. On a trailing 12-month basis, we are now generating $1.78 billion of adjusted core EBITDA and mature rental locations adjusted EBITDA margins were 55%. Based on that strong start to the year and what we are seeing in customer demand, we are raising guidance. Rental segment revenue guidance now implies 29% year-over-year growth at the midpoint, up from 27% in our prior guide. The equipment rental market remains large, fragmented, and under-penetrated by technology. The US equipment rental industry is approximately 84 billion, and the largest providers still represent only a minority of the total market. That gives us a long runway for share gains, particularly with customers who need scale, reliability, and better operating visibility. What matters in this environment is no longer just fleet availability. Customers are choosing partners who can mobilize quickly, support complex job sites, reduce downtime, and help them execute against compressed schedules. That is where equipment share is winning. Our mix reflects that demand. Industrial and non-residential end markets account for 87% of our rental revenues in 2025. And that mix is held in the first quarter. These are customers building factories, data centers, power and grid infrastructure, and large public projects. That mix is translating into growth well above the market. While the broader industry is growing at low single digits, our rental segment revenue grew 37% in the first quarter. The difference is simple. We are not just renting equipment. We are lowering the cost to execute. That gives equipment share pricing power while delivering a better economic outcome for the customers. Mega projects are the clearest expression of this demand. Data centers... Advanced manufacturing, energy, and infrastructure are all moving towards larger sites, tighter timelines, and higher execution risk. At that scale, customers need more than fleet. They need a partner that can mobilize thousands of machines quickly, keep them running, and give operators real-time visibility and control. That is where equipment share creates clear separation. Data centers show the magnitude of the shift. Rack densities have moved from roughly 8 to 12 kilowatts a decade ago to more than 100 kilowatts today, with next generation designs reaching as high as 600 kilowatts. That is driving major investment in power, cooling, and new facilities. all areas where we are not only active, but excel. The same pattern is playing out in advanced manufacturing, where onshoring is driving semiconductor, battery, automotive, and defense-related construction. In energy, grid constraints are increasing demand for mobile and modular power, an area where we have built a leading position. And in federal and state infrastructure, public spend continues to flow into roads, bridges, water system, and ports, where our footprint continues to expand. One customer example captures the broader trend. A top 50 ENR customer running one of the largest renewable power projects in the world had previously chosen another rental partner because our geographic reach was not yet developed enough to support them. Earlier this year, that customer moved 100% of their spend to equipment share. The reasons were specific. Access control, predictive maintenance, the depth of our service technical network, and the ability to manage thousands of machines through a single platform. We are seeing that pattern repeat across the customer base. T3 is what makes that possible. It turns scale into a measurable operating advantage for our customers. I'll now turn it over to Willie to talk more about the T3 platform.

Thanks, Javik. At its core, EquipmentShare is not simply a rental company with software attached. We have spent more than a decade building the operating system for our industry, from machine hardware to data infrastructure. the application and intelligence layers, which customers use every day. The contractors we serve are not just asking for more equipment. They're asking for fewer delays, better visibility, safer job sites, higher utilization, and more predictable execution. T3 is how we deliver that. And it is why customers are consolidating more spend with equipment share. The capabilities customers often value most, things like access control, predictive maintenance, technician coverage, and the ability to manage thousands of machines through one platform, these are not standalone features. They're the output of a vertically owned technology stack that we have built in-house. And on page seven, we compare that integrated stack against industry software providers, rental peers, and manufacturers at every layer, hardware, data, and application. EquipmentShare designs it, we build it, own it, and of course, consistently improve it. Starting with hardware, we design and build and deploy our own sensors and embedded systems across manufacturers' equipment and our own fleet. This creates a rich, real-time digital twin foundation. that fundamentally is different from legacy rental software and environments, which are built around static records, machines, contract, location, analog service tickets, et cetera. These are useful, but often backward-looking and manually updated. versus T3, which continuously captures live operating signals from equipment, job sites, and workflows enabled by that foundational digital twin. So customers in our teams can see what is actually happening in real time in the field. That data then flows into the own data environment, capturing things like utilization, service faults, history, access events, et cetera. These operating patterns are across hundreds of manufacturers and thousands of equipment classes. The platform is where real-time data becomes shared workflows, insights, and predictive intelligence for both equipment sharing and our customers. And because we own the full stack, the customer is not looking through some limited portal while we operate in an entirely different environment. Our teams and our customers work in one integrated multi-tenant environment on the same data model with the same real-time context. That is the opposite of the fragmented environment that drove us to start EquipmentShare. In the legacy model, contractors are forced to manage their business across this disconnected landscape of vendors and systems instead of one platform built around how the job site and industry actually work. T3 collapses that fragmentation. It allows customers to manage their resources with the same real-time operating context that our own teams use to support them. That structure also creates our AI advantage. The breakthrough is not adding AI on top of the platform. It is embedding intelligence into the operating layer of the job site itself with a level of visibility, context, and control that fragmented systems cannot replicate. That vertical ownership is the point. Every machine engagement and data flows through technology we built and control, creating a closed-loop operating system that improves with scale and gives customers a level of visibility, uptime, and efficiency that is difficult to match. This is showing up in the business. T3 is not a feature. It is the operating layer connecting our fleet, service network, customers, and job sites. It helps us deliver measurable customer value while driving loyalty and pull-through demand across the network. And with that, I will turn the call over to Mark. Thanks, Willie.

What Willie just walked through is exactly what we are seeing in the business. Customer demand remains strong in Q1, supported by an increase in construction activity, our expanded geographic footprint, growth in fleet OEC under management, and the value customers are seeing from T3. That demand showed up clearly in the Q1 results. New fleet absorption was strong across the network, and customers continued to pull more of our T3-enabled equipment and onsite services into their job sites. That is an important point. In stark contrast to the industry, our organic site and revenue expansion is being driven by customers who are growing with us because they value the integrated equipment share model. A new organic rental location works when two things come together, customer demand created through T3 and strong execution on the ground. We continue to see both in Q1. Our mature rental locations delivered 55% rental segment adjusted EBITDA margins on a trailing 12-month basis. Those are very strong site economics, and they reflect the operating efficiency, pricing discipline, and customer stickiness we believe T3 helps create. As expected, our newer rental sites continue to ramp at a healthy pace, supported by pull-through demand from national and regional customers. As a reminder, when we open a new location, a significant majority of first-year revenue comes from existing equipment or customers already renting from us in other markets. And roughly 90% of our revenue as a company comes from national and regional contractors. We opened 19 full-service rental locations in Q1, so we are slightly ahead of our original guide. Based on that progress and the demand we are seeing, we are raising our full-year guidance for full-service rental locations to a range of 427 to 435 by year-end or 431 at the midpoint. That implies 79 new rental locations in 2026 at the midpoint. We continue to be disciplined in new site selection to support customer demand. During Q1, fleet absorption was strong, mature locations continued to perform at a high level, and newer cohorts continued to ramp with healthy demand behind them. That all shows up in the embedded earnings power of the network as those growth sites mature over time. Turning to the OWN program, OWN remains a core part of how we fund our growth. Demand for OWN remains very strong. The OWN program is a differentiated platform that opens equipment ownership to a broader pool of capital and allows us to operate equipment at a cost of capital similar to funding on the balance sheet. In Q1, we executed $102 million of equipment sales into the OWN program. As a reminder, OWN program transactions do not occur evenly quarter to quarter. We typically see larger clusters of activity in Q2 and Q4. So Q1 was consistent with how we expected the year to begin. We continue to be multiple times oversubscribed across high net worth, family office, and institutional channels. And we are on pace to meet our own program targets for the year based on the current CapEx plan. That demand reflects the quality of the asset class and the differentiated visibility that T3 provides participants in the program. With that, I'll turn it over to Dave.

Thanks, Mark. We're excited to report our results for the first quarter as customer demand continues to drive our organic growth and continued positive momentum. While our financial results for the quarter provide measures of our business for the year-to-date period, we also believe it is meaningful to evaluate our operating performance over the trailing 12-month period, which we have provided in our earnings release. For the first quarter, our total revenue was $989 million, reflecting a year-over-year increase of 38%. Our rental segment revenue grew 37% to $764 million, and rental segment adjusted EBITDA was $323 million. both driven by continued footprint expansion and growth of our managed fleet. Sales segment revenue was $179 million for the first quarter, up 23% year-over-year, with equipment sales to the own program of $102 million, up 7% year-over-year. Sales segment adjusted EBITDA was $26 million, reflecting disciplined and selective sales into the OWN program, which, as Mark mentioned, continues to be oversubscribed. Our first quarter operating results include $17 million of non-cash, stock-based compensation expense related to previously disclosed equity awards granted by our board to the founders, in connection with our recently completed IPO. The IPO Founders Awards comprise five tranches of performance stock units, which only vest and become issuable when the company's stock price achieves certain defined hurdles, with the last tranche becoming issuable upon achieving a $90 billion market capitalization. For accounting purposes, the fair value of the award will be recognized as non-cash, stock-based compensation expense over the performance period. More information will be provided in the footnotes to our financial statements. Adjusted Core EBITDA for the first quarter was $399 million, up 39%. Growth was driven by continued expansion of our full-service rental location footprint and maturing of our existing rental sites. Adjusted Core EBITDA reflects our underlying operating performance by excluding items unique to our organic growth and fleet sourcing strategy. most notably own program payouts and new market startup costs. For reconciliations to our operating measures, please refer to the details provided in our earnings release. Turning to the balance sheet, liquidity, and cash flows, our total available liquidity was $1.6 billion as of March 31st. Comprised of $329 million in cash on hand, and $1.3 billion of availability under our ABL facility. As a reminder, we replaced our prior ABL facility during the fourth quarter of last year with a new facility led by Wells Fargo, extending the maturity of outstanding borrowings to year 2030 and at a meaningful reduction in our total cost of capital. Net leverage decreased to 2.8 turns as compared to 3.2 turns a year ago, reflecting the use of proceeds from the IPO to pay down a portion of outstanding borrowings. Cash used in operating activities reflects our organic site expansion strategy, along with increased working capital corresponding to the growth in our revenues and the timing of payments. Net rental capex for the first quarter was $213 million after gross purchases of $328 million. In response to customer demand, we intend to invest discretionary cash flow into further site expansion, increasing fleet under our management, and organic growth initiatives. We believe the investments we are making in expanding our footprint with T3 provide the best return on invested capital. Finally, with our average fleet age of approximately 30 months, We have meaningful operational flexibility throughout industry cycles, including the ability to moderate fleet purchases, pause new site openings, and age the fleet if conditions warrant those actions. With that, I'll turn the call back over to Javik.

Thanks, Dave. Based on the strength of first quarter and what we're seeing in customer demand, we are raising our full year 2026 outlook. The updated ranges are as follows. OEC of $10.15 billion to $11.2 billion. Full service rental locations of 427 to 435. Total revenue of $5.15 billion to $5.58 billion. Rental segment revenue of $3.37 billion to $3.64 billion. Approximately 29% growth at the midpoint. Adjusted core EBITDA of $1.88 billion to $2 billion. This includes $221 million of sales segment EBITDA at the midpoint. A new disclosure to provide additional segment level transparency. Own program payouts of $106 million to $962 million and gross rental capex of $2.28 billion to $2.5 billion and net rental capex of $819 million to $899 million. We continue to expect owned program OEC at 55 to 60% of total OEC under management at year end and over 260 mature rental site locations. Looking further out, we continue to plan towards approximately 700 full service rental locations by 2030, opened organically and informed by customer demand. Construction productivity has been stagnant since the 1940s. not for lack of demand but because the industry was built on fragmentation our thesis is simple if contractors can run their job sites on a single technology platform they will that was true 40 years ago it is true today and it will be true a decade from now our approach stays the same We scale with discipline. We build the technology platform that creates customer value. We use OWN to fund outsized demand without straining the balance sheet, and we manage the growth, margins, and ROIC. EquipmentShare is built for where the industry is going. Bigger job sites, more complex work, and customers who need one partner delivering at scale. We appreciate your continued partnership and support. Operator will now open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Rob Wertheimer with Mellius Research. Rob, your line is open. Please go ahead.

Thank you. Good morning, guys. So my first question is on revenue. you obviously had very strong revenue performance. And we've seen in the past, you've grown fleet a bunch, you're growing locations a bunch. So rental revenue doesn't always outstrip fleet. And in this quarter, it did by a wide margin. And so I'm just curious, did things go much more right than you expected in the quarter? Or is this just kind of maturation of some of the stores kind of starting to deliver? How would you characterize that outperformance?

Hey, Rob, thanks for the question. So it's, as you mentioned, it's a number of things. It was a particularly good quarter as we would expect in this macro backdrop. So there's good fleet absorption. We're growing with customer demand. And so that obviously drives the fleet absorption I just mentioned. And then also site maturation as well. All those things together is what drives the revenue growth, especially when you pair it with the OEC.

All right, perfect. And then I'd like to ask just a bigger picture one, which you addressed pretty well in your opening comments. But I think investors are still trying to grapple with, you know, what is T3? What are the biggest benefits? You know, how differentiated is it in different spots and so on? So I wonder if you could kind of just give a couple examples of that concept of multi-tenant database and your customers all looking at the same data and their ability to manage fleet differently and better, just to make it a little bit more tangible for us. And I'll stop there. Thank you.

Yeah, this is Willis. So when we use the term multi-tenant and, you know, a singular data structure, it really is speaking to you want to think about what is, you know, the legacy environment. So in the old world, you've got fragmented systems, you know, analog process. You've got ERPs that a rental provider might be using and then the customer might be using. So interoperability between those was really manual phone calls. you know, emails and best case scenario, maybe a multi-year API integration. And then you contrast that with equipment share. So T3 enables, if we rent gear, that custody follows the contract. So there is no manual effort. At its core, there's this ledger that understands custody of that resource and that digital twin. So there's no effort that we have to do to actually extend the value in that digital twin to our clients. And there's no effort they have to do to actually consume that. It's all available within T3. And that is extremely unique. I think it is a good question you're asking because a lot of folks will look at the surface and the edges of the platform and they look at, you know, telemetry data and how you use it and how it can implicate things like utilization and insights, et cetera. The real challenge is actually getting that data at scale to be driven and the access to it to be custody driven without human intervention. And that's what we have solved. So then, of course, we earn the right then to deliver that insight at scale. So these terms, you know, I think will be more common as we move into the AI world because it only compounds its value. So now, instead of just a human being able to look at this, you suddenly have reasoning capability where there's deterministic structure data at scale versus if you're in the old world, you're still stuck because there's no way to actually create that deterministic extension of data to your clients. Or, you know, a multi-tenant environment, it's one-to-many. It's not just like one provider sees it. The bank sees it. The insurance company sees it. The renting company sees it. The sub-renter sees it. The equipment company sees it. You know, the fueling company might have access to it. So there's this really complex orchestration of data that is natively solved with T3.

Thank you.

Your next question comes from the line of Meg Dobre with Baird. Meg, your line is open. Please go ahead.

Hey, thank you, guys, and congrats on a really strong start to the year. Maybe I want to follow on that discussion with Rob there. And, you know, you talked about the big win that you had with a top 50 contractor, and I guess I'm sort of curious when you're delivering these kinds of wins, what is sort of like the value proposition, the framework that really kind of comes out of this? One of the concerns that I think a lot of investors had was pricing and that being the tool that you're using to win this business. So maybe comment on whether or not that perception is accurate and comment how you think about industry conditions and your ability to really capture the value that it seems that you're bringing to the table through pricing or any other means?

Yeah, as we mentioned, jobs are getting bigger and more complex. So like I was saying before, with our ability to natively extend data to any party without human intervention, it is a very unique value proposition. Now, if you think about the practical examples of what that might mean, So let's say you have a massive job site with hundreds of companies on that job and thousands of machines. And amidst that chaos, you then try to determine who has access to the digital twin, the real-time data of all this activity. So our platform handles that natively. And when you practically think about that, you have questions like, well, can this human use this machine? And again, think about the thousands of humans that are on a job and the thousands of machines. Our platform answers that in real time. So there's no, there's no phone call. There's no staff, there's no, you know, scurrying around and the chaos of that, or even, uh, over renting a machine. So instead of going, well, I can't use that machine. So I need to call someone else to get another machine. You suddenly have this, this real time ability to grant access or understand custody and access. So even if we sort of narrow the scope, just down to this pragmatic environment of, you know, folks in the field. Brian to utilize these machines because the machines are how they do work. So if you think about building a, it doesn't matter if the, you know, a highway, a data center, an office building, you've got humans and you have machines and that's a constructive stuff. So being able to have all of that suddenly reduce the chaos and you have this controlled environment, um, that T3 brings means that, you know, if you're a big client and you're about to encounter that chaos, who are you going to choose to be your partner? Now, we're not big enough to meet 100% of demand, and I don't know if we'll ever be big enough to meet 100% of demand. But what we do get is we get that first call. And that is absolutely an advantage we have because then, of course, instead of trying to gain market share by cutting prices, we gain market share because we get value. Of course, we want to give a good value to our clients. I believe they need to rent fewer machines if they use us because suddenly you don't have these duplication of, you know, one sub is using aerial boom lift. And then the other sub can't share it. So he has to run his own boom lift. And then the other sub can't share it. And so on. You sort of see how that can propagate and create complexity and, you know, lower utilization, unsafe environment and all that. We help solve those problems. And because we help solve those problems, the demand is there. And I think the number speaks for themselves. I mean, we ourselves look at the demand we've had for the last 10 years. And, you know, outside of M&A, nobody's seen this.

and that's really because the differentiation we bring all a job can speak to maybe the pricing yeah i think what's uh thanks for the question i think the if what's changed for equipment share of last decade a decade ago we had one store we now have the scale that we can deliver across the us and we use that example customers have realized not only do we have the scale but we have the sophistication of what we talked about from a technology standpoint and this is built in a tech stack that actually solves our customers' problems. They hear about tech. We all understand AI is changing fundamentally how work is done. But we're still in a very physical industry. You still have to have access control. You still have to have visibility of your machines. You still have to have job sites where when you use equipment share, you can run the safest job sites. You can run the most productive job sites. At the end of the day, our customers are in this. They have businesses. They need to make money. When you use our tech stack, when you use T3, That unlocks value, and as we talk about growth, we talk about margins. We have the highest margin in the industry, and that return on capital, that's also for our customers because of the value we actually provide from technology.

Understood. My follow-up, one of the metrics that stood out to me from the quarter was dollar utilization, and I know you guys don't specifically talk to this, but by my own math, this metric expanded something like 150 basis points year over year. So if you were willing to comment at all, I'm curious what's behind that. Is it better utilization of fleet relative to a year ago? Is it maybe a little bit of help from the previous discussion we had on price? And is it fair to expect continued improvement on a year over year basis in this metric as 26 progresses? Thank you.

yeah thanks for the question so like you know as we said before we don't really comment on seasonality but what we can say when you look at our customer base at about 90 being national regional contractors p3 created the most value on mega projects and large job sites those are really long duration projects with uh with not the sort of fleet turnover that you see in the local market and so we definitely do see that as a tailwind in uh and the actual yield that we're getting off of the fleet and and our uh utilization in the market. And then I'll let Javik kind of talk about what we're looking at for the rest of the year and talk about the guide a little bit more on 2026.

Yeah, I think we look at the guide. We upped it from 27% at the midpoint to 29%. And we got to take a step back for equipment share today. In an industry at the scale we have, that's never happened in history from organic growth. And it really reflects, like Willie talked about, that customer demand driven by a differentiated solution. You see that demand. We're seeing unprecedented demand across megaprojects, data centers, manufacturing, infrastructure, really across every sector that we're serving as a customer. With that said, we don't want to get over our skis. We're a very disciplined company. We're only one full quarter into the year, and that's why we raised it from 27% to 29%. If you think of our organic sites, They're maturing. We're seeing really good customer demand. So for us, we really like what we're seeing as far as today and where we're actually going. Thank you, guys.

Your next question comes from the line of Gary Leibowitz with Wells Fargo Securities. Gary, your line is open. Please go ahead.

Yes, hi. Good morning. This is Jerry Rebich. I was hoping to jump in on the rental gross margin performance. It's a really good performance, depending on the metric, up about 200 basis points year over year. I'm wondering if you folks can comment on what was performance on the same store, like-for-like basis for mature sites, and if you're willing to comment on what was the tailwind from new starts as a percent of total declining as your footprint grows and the The denominator gets larger here. Thanks.

Hey, Jerry. Thanks for the question. So on the gross margin side, if you kind of compare the equipment rental segment revenues against direct COGS, we saw a nice lift in gross margin and also the leverage on the SCNA side. So both of those were good tailwinds on top of the volume. We do break out the segment, the cohorts. We did that at the year end, and we'll do that We'll do that again for you periodically. But at a high level, we're seeing growth across our segments. Like I said, the prepared comments are new sites are ramping nicely. And then if you kind of think about the same store from a margin perspective, that's 55% TTM for the greater than 24 months. Those mature sites was 55%. And we saw strong performance against those, plus the growth of the new sites is what drove the performance in Q1.

Okay. And then can we just go back to the dollar utilization part of the conversation? It looks like for the industry, dollar utilization was a nice tailwind versus normal seasonality in the first quarter, and the market had been oversupplied from aerials. I know for you folks it's a bit different, but Can you just comment on the pricing trends that you're seeing in the market? It feels like from checks that for the first time in 18 months, three years, we're getting nice pickup in rental rate heading into the construction season for the industry overall. I'm wondering if you can comment and talk about if that's what you're seeing in your markets as well.

Great. Yeah. Aerials is obviously part of the growth, but all across the core and advanced solutions and site solutions, we're seeing strong demand. From a pricing perspective, as we said before, we see a really stable pricing backdrop right now. There's a lot of demand, a lot of good customers with a lot of activity. And so we've seen a stable pricing backdrop on our end. And given the T3 capabilities and our customer relationships, we've been able to demand to be able to man the right kind of price at or above the industry, which is where we target for our customers.

Thank you.

Your next question comes from the line of Joe Ritchie with Goldman Sachs. Joe, your line is open. Please go ahead.

Thank you, and good morning, everybody. So I know that you guys typically don't comment. on seasonality, but historically margins improve in 2Q and 3Q really through the prime construction season. Can you maybe just provide a little bit of color just on margins going forward as the year progresses?

Yeah, Joe, thanks for the question. So as Javik mentioned, into the rest of the year, On the revenue growth for the equipment rental revenue, we grew up the guy from 27 to 29 at the midpoint. We had a strong quarter for Q1, as you mentioned. And then, like you mentioned, there is a lot of strong backdrop in the industry right now through the rest of the year, which we view as a positive sign. You can kind of see in the guide where we're implying for margins through the rest of the year. But we think that, you know, the rest of 26 is a really strong backdrop, especially for the customers that we serve. And so we're, you know, we think that's a positive development.

Okay, great. And then, look, there's obviously a lot of concern in the market right now regarding inflation, you know, geopolitical events of the last quarter. I guess it doesn't seem like you guys are seeing any change in customer behavior through the quarter or into Q2. Just any comments on whether things are getting delayed from a project perspective at all or as your suppliers are talking about the supply chain environment today, anything changing, lead times changing, just any color around that would be helpful.

Yeah, I think as we discussed before, we're seeing unprecedented demand across all the sectors from our customers. One of the advantages we have and the largest buyers in the world for manufacturers, we have very, very strong relationships. Those relationships kind of cross over the ups and downs from economic cycles, and that preserves our ability to maintain through the years those relationships and that pricing from a a consistency standpoint. And if you think of rental, which is different than some of the other subsectors, we already have our nine plus billion dollars worth of fleet. We're already monetizing that fleet. That is, if you think of inflation and tariffs and things like that, that fleet is already owned. It's already our fleet. So I'm able to monetize that. And that is when you have excess demand and limited supply, and when there's a little bit of dislocation in the market, That gives pricing power to this industry, if you think of the macro. So there's something where the largest players do absolutely have an advantage in times like this.

Helpful. Thank you.

Your next question comes from the line of Aaron Kimson with Citizens. Aaron, your line is open. Please go ahead.

Great. I wanted to start with a macro question as well. From your vantage point, has there been a noticeable change in the commercial construction macros since you reported in mid-March? And if so, what are the main drivers?

It's actually an interesting question. You think of just from a recovery from an economic standpoint, I would look at this more from a macro, like a K-type recovery. You've got unprecedented demand across from onshoring, manufacturing, data center mega projects. And then what's loosely associated, you'll see how we report our customers. When you think of residential and commercial, that's kind of stable, but in some areas, in some geographical locations, those are actually going down. So when you think of that, what's really fascinating about a company with our scale and with the tech stack, we have mobile fleet. We can optimize the best customers that we serve them with the highest returns. But to answer your question, We're saying we bucket that. It's about 11%, I think, the type of customers we serve if we're looking at the – call it the commercial, residential. And that's stable, but in some geographical segments, you actually see a little bit of – even less than stable. So, like I said, more of a K-type recovery.

Okay. That's helpful. Thank you. And then as a follow-up, Lily, can you talk about how the pace of product development for T3 has been changing with recent model advancements? And whether you see the lower barriers to building technology as a net threat for the 10-year tech gap, you all have talked about equipment share having versus the industry, or potentially giving you a chance to compound your tech advantage relative to peers.

Yeah, it's pretty exciting. The pace of development has grown by an order of magnitude. And I think that's true of any forward-thinking tech environment where it's a software, you know, only stacked. The advantage we have is that, you know, from a moat perspective, so we get the tailwind and this whole new environment of, you know, software development has changed, and there's really no barrier in the software world of building something, say, in a year. Like, if you can imagine it, you can build it. Where the barrier is, and really our moat, is when you start getting down to that stack and to embedded layers and hardware and integrations and then you know, whether you think about ultimately then the IP associated with things like our access control and then, you know, manufacturer installs, et cetera. That's where you're in multi-year, you know, fairly complex, challenging environments to actually build that technology stack. So we start from the ground up. You know, we build our own sensors. We write our own better software. We own that IP. And that's not just like one simple thing. You have thousands of know machine product categories and hundreds of manufacturers and integrations that that is required all that's necessary to then feed into a structure and a you know a structured environment of data that then like i described before where you need the capability then to deliver and that data to many parties based on custody so there's a whole ecosystem there that has to develop But if you're only looking at software and building, you know, if somebody is building a simple software platform, that is, you know, that is not hard to really duplicate. And pace is really what matters now. Domain experience is what matters. Context is what matters. So when you think about equipment share, what we have is we're not software only. We have a deep, you know, thread all the way into the hardware world that is our IP that we own. that then connects to, you know, machines and the whole environment. And this spans from, you know, vision systems like security systems on job sites to machines and keypads, et cetera, all that. And we really don't have time to go quite into all those details, but 10 individually. But then if you move to the software side, what that gives us, we have industry leading, industry, and if you think about just me, you know, leading the technology side of this, I have the advantage of knowing what it means to build that scale in this environment. in the physical world and in the software world. And that is, that is unique. Like when you think about our future competitors, when they, when they may or may not turn up, they're going to look a lot like us. They're going to have these two worlds of data, software, hardware, et cetera, and then a whole world of operational excellence and distribution, because then the humans who are leading that and have the view and the expertise of what should be built, which is the barrier in software is simply what should be built. They have to have that domain expertise because LLMs and AI, there is no earth to build. They're directed by humans. So now it's really the advantage is not squarely in the box of outliers, differentiated companies, and companies that span both worlds of physical and distribution and hardware, but also on the software side.

Got it. Thank you both.

Your next question comes from the line of Jamie Cook with Truist Securities. Jamie, your line is open. Please go ahead.

Hi, good morning and congratulations on a nice quarter and guidance rates. I guess if you could just frame, obviously, we've raised the guidance. Nice start to the year. It sounds like the macro is picking up as well as you're doing a good job executing. Any way you could just help us frame what you have embedded in sort of like the high end and the low end of the guidance and If we were to raise, I guess, guidance again, do you think it'd be more reflective of just macro improving or just more sort of equipment share specific initiatives in terms of opening more new stores? And then I guess my second question is, in terms of your CapEx guidance raise, can you just talk about like buy equipment, like where the incremental demand is coming from? Thank you.

Hey, Jamie, thanks for the question. I'll take that in a few parts here. So on the ranges and the guide, we talked about the midpoint. What kind of has the flux on the high and low range is we can pause or slow down growth in a macro environment if we wanted to. All our, obviously, purchase orders, we can flex if needed. And then on the high side, too, the opposite is true. We're quite flexible from a balance sheet and fleet growth perspective in new site openings. And so that is kind of embodied in in the range there. What would drive, as you were saying, what would drive a beat is it's pretty simple. We execute well within a good macro backdrop. So both those variables drive our performance. And so as we continue to execute on mega projects with large customers, prove the tech differentiation to more and more customers and get adoption and drive value for our customers, that obviously will translate within a strong backdrop for the customers that we serve into stronger performance. And on the CapEx side, you can see, you know, on both the core and the advanced fleet, both are seeing great, great demand. We don't break that out specifically, but you can kind of see the split in our historical financials. I will also note, even on the specialty advanced solution space, we are the fastest growing advanced solutions organic business in the industry as well. And so we've seen a lot of growth and good contribution in that part of the fleet business as well.

Thank you. Your next question comes from the line of Ken Newman with KeyBank Capital Market. Ken, your line is open. Please go ahead.

Hey, thanks. Morning, guys. Nice lifelong beat this quarter. Wanted to just dive into the adjusted core EBITDA guide. You know, I think it is adding back, call it $19 million in that stock-based comp this quarter. I think historically that expense has been included in that calculation. So maybe a two-part question. First, just any color on why the change on that methodology versus last quarter? And then second, if we are going to start continuing to add back SBC to the adjusted core EBITDA for the rest of the year, is that going to be similar to what we've seen this quarter? I'm just trying to get a sense of, you know, you raised the EBITDA guide by $70 million this Is that primarily just being driven by the higher stock-based comp ad backs or any help there?

Yeah, Ken. So let's talk about the stock-based comp for a second here. To compare SBC in 2025, $4 million was the SBC in 2025. The change in 26 and going forward is almost entirely driven by the founder award PSU stock-based comp expense. that was that was granted at the time of the IPO. So of the 19 million of SBC and Q1, 17 of that is the founder awards. To remind you what the founder awards are as well, there's five tranches and the last tranche is a $90 billion market capitalization for the company. So to so for us, when we think about performance and the way that those are accrued from the accounting perspective, having those tranches up to $90 billion is not really reflective of the actual earnings power of the business, which is why we included that. So the raise, the actually original guide that we had didn't have that substantial amount of SBC in there in the first place. So the SBC exclusion from adjusted core EBITDA is actually consistent from the year-over-year guide. So that $70 million guide had no impact from the SBC exclusion. that was driven by the founder awards. And then to answer your second question, the actual founder award expense impact in out years is noted in a footnote in the 10Q, which is now available. And so you can actually go see the annual impact there and you can drive your quarterly accordingly.

Okay, very helpful. I appreciate that. And then maybe just for my follow-up here, And I was surprised to see in the deck that the appraised value on the own fleet came down a little bit from the fourth quarter, just given that we did see the OEC on the own fleet was up slightly. And I also think used equipment prices have continued to come up in the secondary market. So maybe just any help on why the appraised value is a little bit lower or just how to think about appraised value on a go-forward basis.

Yeah, that's just normal economic depreciation against the much larger owned program basis compared to the incremental add of new owned program OEC. And so that delta in home program appraised value is entirely consistent with the normal economic depreciation that we expect that gets embedded inside of the appraised values. That is not reflective of softening that we're seeing in the used market. If anything, we're actually seeing a stronger used equipment market, which To your point, those appraised values obviously will track with the on-program equipment, but you have to factor in normal economic depreciation on that gear. And when you do, it's kind of a standard baseline comparing Q over Q, even with the new on-program additions.

Understood. Thanks.

Your next question comes from the line of Avi Yaroslavich with UBS. Avi, your line is open. Please go ahead.

Good morning. Thank you. So just want to address what you're seeing, the specific relevant markets that's telling you to accelerate the new openings this year and raise your capex. Is it more about the more activity in the market or more about you taking more share than you were previously thinking? Just I get that it's both, but wondering what you would say is the bigger driver here.

It takes both. answer the question so what we're seeing and we talked about a lot so we have stores that are maturing so the stores themselves again we projected 27 we raised that to 29 if you think of the organic growth of what we're doing in this industry and the differentiated product you're going to see that accelerated stores start at zero and they ramp up you're going to see that add back and what's interesting if you look at us and i think we've talked about it before We're at that over midpoint where there's more mature stores actually producing revenue and producing the associated EBITDA and earnings than there are actually stores that we're opening. So as we do our path to 700, this is a massive industry. And we talked about that as well. And if you think of our place in the industry, this is $15 trillion. And if you look at pundits who have studied it, we still lag the industry dramatically from a productivity level. So that's what we're actually solving for. So large industry growing incredibly good macro drivers in our industry for all of us who are in the industry. And then our unique position really drives that growth.

Okay. And I guess just given the plans that you have through 2030, how should we think about how you're executing that plan? When we think of the locations that you're adding this year, is it more governed by what you think the market can support or more governed by how quickly you can get these locations open.

Yeah, so we're right on track. If you think of our guide, and we're slightly above the midpoint from the stores we actually opened, we're right on track. Because of the size of the industry, not to reiterate what we talked about before, this is in spite of the industry itself. The industry, again, there's one to two trillion that pundits say we lose, and I agree with them. because of just lack of basic productivity that our tech stack actually starts solving. So we're intent on going there. We're intent on solving that. And we think of the different verticals that we're turning on besides just rental. Rental is the gateway into the industry, allows us to actually broadcast that network, allows us to serve customers. But our customers need many, many more services. And what's fascinating is that customer acquisition cost goes to zero as we serve them in other segments of what they actually need. But we are very, very focused. This is a physical industry. You can't just solve it with tech. Willie talked about that a bunch. You actually have to have physical distribution. And because we provide this product, because we have the scale now nationally, our customers drive that, differentiate our customers, drive that expansion. So that's what we're seeing today. And we expect to see that through 2030.

All right. Appreciate the time. Thank you.

Your next question comes from the line of Scott Schneeberger with Oppenheimer. Scott, your line is open. Please go ahead.

Thank you very much. Good morning. For my first, you all increased the 2026 guidance for total revenue by $100 million and guidance for the rental segment increased, I think, about $55 million and clearly very strong and congratulations. The remaining $45 million increase, is that primarily equipment shares? You kind of touched on that, or is other revenue going to be a sizable contributor? Just looking for what's behind that. Thanks.

The guide increase, if I understand the question, the guide increase was driven primarily by equipment rental and equipment sales revenue. And then, Scott, just to call out, and Jack mentioned it in the prepared remarks, We now break out the equipment sales segment, even the contribution in the guide separately from the other, so you can kind of deconstruct those as well. But the guide increase on revenue is getting driven by the rental segment, the sales segment.

Great. Thanks. And then, um, uh, net leverage ratio decreased, um, from the free of fourth quarters, 3.2, down, down, down to 2.8. I understand there's seasonality and it's probably going to increase in the middle of the year here, but making really nice progress there. Um, how do you see that ending, uh, ending 2026? Are you, are you tracking ahead with this strong EBITDA growth that you're, that you're driving?

Yeah, so we're still on the same target for the year-end and the low threes. Because we have so much demand, because we're getting 16.5% maturity at ROIC, our deployment of capital, you know, it's obviously very favorable from a capital deployment perspective. But from a leverage perspective, we're still targeting low threes at year-end, mid to low twos, printing the mid to low twos and the medium to long term.

Great. Thanks. Congratulations.

Your next question comes from the line of Kyle Menges with Citigroup. Kyle, your line is open. Please go ahead.

Great. Thanks for taking my questions. I was hoping if you guys could just talk a little bit more about your PowerGen offerings for data centers and just anything you're maybe exploring to add in that area and curious if there could be an opportunity to leverage the OWM program with PowerGen for data centers.

Yeah, I think it's a great question. As Mark had mentioned earlier, our specialty division is the fastest growing in our industry. As we've talked about, it's paired with our core and the rest of the company that's also growing at a very healthy amount in the industry. But as we all see within the U.S. and really globally, from a data center perspective, and I talked about a little bit in the prepared marks, you have 40, 50 square feet, which 10 years ago, you used maybe 8 to 12 kilowatts of power. When you have today, and some are saying it's even up to a megawatt, but let's call it 500 to 600. If you have Blackwell and some of the Vera Rubin, some of the best chips are consuming in the same amount of square footage. sometimes 40 to 50 times more power, and then associated cooling. So if you think of the power demand, you think of the cooling demand, if you think of what, from if we're just focused on specifically data center, and there's a lot more with electric vehicles and trucks and everything else from power consumption, but data centers, you need four things. You need a building, you need cooling, you need power, and you need the actual chipsets. So three of those things, we are very focused, and I would argue we say the best in the world at supporting when you have massive, massive acceleration. So we think it's a huge part of it. Again, we're growing, we're a very disciplined company, but the fastest growing in the specialty industry. And where does power come from? That's where you're seeing a lot of those micro grids. You're seeing natural gas in the US specifically is a really good support. You're seeing turbines, you're seeing resets, you're seeing mobile modular because you have to spin up additional power and sometimes 40 to 50 times more power. You don't want to strain the grid. So it's something we squarely play in, and it's something that we, I would argue, say are the best in the industry from a mobile modular.

That's helpful, and I am curious your thoughts as well as you see maybe some other equipment rental companies signing partnerships with construction management software companies just as maybe more of your competitors do that in equipment rental. I'm curious just how T3 can still gain share in that environment and how T3 can differentiate.

Yeah, I don't think the future is really trying to cobble together a bunch of different fragmented legacy systems. I mean, it just pains me trying to think about the suffering through those types of integrations. But AI has completely changed the landscape on time to value in the software world. Like I described before, though, you know, software is no longer a moat. The moat, it can be present within users and, you know, depth of integrations, but that's quickly dissipating. The moat really becomes the integration to a hardware and a physical world. And we have an extremely, you know, robust moat there. But then it translates then to what to build. Like you have to have a view on the industry. You have to have a vision because now the barrier to generating code is, you know, has gone from very high to it's almost gone. So, yeah, I mean, I applaud any effort to create value for a customer. I just don't think those tools are legacy systems that get, you know, strung together with some, you know, ancient APIs. But anyway.

All right.

Thank you.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending Equipment Share Q1 2026 Earnings Call. You may now disconnect.